What’s the matter with the Working Time Directive?

To quote this document: Tanguy Séné, “What’s the matter with the Working Time Directive?”, Nouvelle Europe [en ligne], Wednesday 29 January 2014, http://www.nouvelle-europe.eu/node/1785, displayed on 19 March 2018

In the abundant Eurosceptic speech of the British Conservatives, one bête noire stands out: the Working Time Directive. First adopted in 1993 and twice modified since then, this piece of European legislation compels EU member states to adopt minimal norms of working time arrangements. As the debate heats up over its revision, let us ask an important question – is it just costly red tape?

From 2009 as leader of the Conservative party to 2013 as the British Prime minister, David Cameron's mantra has been that employment and social legislation should be a complete national prerogative. The Working Time Directive (WTD) is often in his sights – he attacked ‘the aspects of the Working Time Directive which are causing real problems in the NHS and the Fire Service’ (2009), adding that ‘[s]ome areas where [the single market] has been extremely frustrating is the working time [directive] and areas that have come in under health and safety’ (2011), to conclude in the very Eurosceptic Bloomberg speech that ‘[w]e cannot harmonize everything’ (2013), suggesting the WTD as a shameful example.

Recent YouGov polls show this reflects a wider national mood: two-thirds of British citizens want employment legislation not to be decided by the EU, but by their government (YouGov, December 2011); 29% would also like an outright repatriation of EU competence in this area (YouGov, January 2013). In contrast, ‘Britain’s European neighbours […] do not get quite as worked up about EU social rules as the UK’, as observed by the think-tank Centre for European Reform (CER). The CER underlines that a simple Google search for “working time directive” results in over 320,000 references in the UK against 67, 000 in Germany and 17, 000 in the Netherlands (CER, 2013). Why so much fuss in her Majesty’s Kingdom?

Why has the Working Time Directive become so controversial in the UK?

First and foremost, what is the WTD about? It is a package of working and resting time regulations:

a limit to weekly working hours, which must not exceed 48 hours on average, including any overtime

a minimum daily rest period of 11 consecutive hours in every 24

a rest break during working hours if the worker is on duty for longer than 6 hours

a minimum weekly rest period of 24 uninterrupted hours for each 7-day period, in addition to the 11 hours' daily rest

paid annual leave of at least 4 weeks per year

extra protection for night work, e.g. average working hours must not exceed 8 hours per 24-hour period

What proved as contentious as these norms (the UK voted against the directive back in 1993, when it was passed) is their EU legal basis: the WTD was proposed by the European Commission as a health and safety measure. This choice was strategic: in this category of legislation, the Council of Ministers had to vote it under the qualified majority rule (a supermajority of member states votes weighted by their demographic weight). Had it been considered a working conditions act (a plausible approach), unanimity would have been necessary – enabling a reluctant Conservative government to veto it in effect.

Hence the outcry that has arisen in Britain. Then Employment Secretary David Hunt declared: ‘[t]his Working Time Directive is an abuse of the Treaty of Rome because to try to regulate the work time of people on phony health and safety grounds is an abuse... It cannot be said by any stretch of the imagination that this is a matter of health and safety.’ (The Scotsman, 1993) The UK sued the Council at the European Court of Justice.

But the ECJ supported the directive, taking advantage of ‘the grey area between traditional health and safety measures and the right of employed persons’ (Barnard, 2012: 533). Referring to the constitution of the World Health Organization (WHO), it upheld the definition of health as ‘a state of complete physical, mental and social well-being that does not consist only in the absence of illness or infirmity’ (ECJ, UK v Council, C-84/94). Well-being has thus been construed as part and parcel of health and safety, and working time regulation as fundamental to well-being.

Here is then an interesting question: what evidence supports this view, and to what extent can it trump economic considerations? Much is at stake especially since the 2003 revision of the directive considerably enlarged its scope, including important sectors formerly excluded such as transport and doctors in training.

Red-tape, well-being and economics: where do the costs actually lie?

There are a certain number of business arguments against the WTD: long working hours enable workers to earn more money, and companies value the flexibility that result from these extra hours. Economic freedom may be judged to be put at risk, and, moreover, the measure appears to be quite costly: between £3.5 billion and £3.9 billion each year according to the estimates of the free-market think-tank Open Europe (2009) – although the statistical methodology is little described. This represents a huge chunk of what the same think-tank deems to be the annual cost of EU social policy legislation to the UK – £8.6 billion (Open Europe, 2011).

One particularly controversial point is the SIMAP and Jaeger case law of the ECJ. The court ruled that on-call duties at the workplace (common among medical professions) was equivalent to working time, following the rationale that an on-call doctor remains more constrained by his employer than a doctor on stand-by. Thus such periods had to be subject to the WTD norms – which can arguably disturbed the usual working organisation of sectors like health care.

Yet most of these commonly evoked economic arguments to withdraw the WTD may be flawed – for several reasons, including economic ones and not just the ECJ’s humanistic reaffirmation that ‘purely economic considerations’ cannot trump the improvement of workers' health and safety (ECJ, BECTU, C-173/99).

First, the WTD allows for individual opt-outs from the disparaged 48-hour week (this clause was imposed by the UK). The European Commission pointed out as early as in 2003 that the UK was making a widespread use of such derogation: 16% of the workforce was working more than 48 hours at that time, compared with 15% in the early 1990s (i.e. before the implementation of the WTD), making the UK the only country where working time had increased for the past decade (European Commission, 2003). More recently, the proportion has gotten even higher – 18% in the second quarter of 2008 according to the Office for National Statistics (ONS) (ONS, 2009).

These are significant numbers, highlighting the difficulty in ensuring that the workers’ individual consent to overtime (a condition to the derogation) is genuine. According to the Trade Union Confederation (TUC), up to 44% of those who signed an opt-out declared that it was presented as a condition to their employment; 23% of long hours employees had actually not signed an opt-out (TUC, 2008). It is indeed not hard to imagine how the bargaining power of employers can outmatch that of individual workers and take advantage of the WTD’s derogation. Most importantly, opt-outs also entail their own costs. Following article 22 of the WTD:

the employer must keep up-to-date records of all workers who work more than 48 hours a week

the records are placed at the disposal of the competent authorities

the employer provides the competent authorities at their request with information on cases in which agreement has been given by workers to perform work exceeding 48 hours over a period of seven days, calculated as an average for the reference period

Those rules must account for significant administrative costs resulting from all the derogations to the 48-hour week – and yet such costs are not pointed out by the Conservatives nor Open Europe!

Furthermore, costs and benefits in terms of well-being should also been taken into account - particularly since ‘[r]esearch has shown that it is possible to collect meaningful and reliable data on subjective as well as objective well-being’ (Commission on the Measurement of Economic Performance and Social Progress, 2009). This argument was rightly upheld by the Commission as a justification to the ‘health and safety’ legal basis and backed by studies showing that weekly working time of more than 50 hours and lack of resting days could cause several physiological harms including disturbed sleep (European Commission, 1990). A recent independent report by Deloitte, a global consultancy, supported this view (Deloitte, 2010).

The diagnosis is redolent of Shakespeare’s intuition: ‘how sour sweet music is/When time is broke and no proportion kept!/ So is it in the music of men's lives.’ (Richard II). Flexibility at work is not without costs.

This leads to the third point: costs in well-being may actually be topped-up by losses in productivity. Published in 2009, an evidence-based study carried out by researchers from Warmick and Harvard University demonstrated that junior doctors in the UK respecting the 48-hour working week made actually fewer errors than the ones working 56 hours a week – whereas a lower quality of care was not proved (Cappucio et al., 2009).

Therefore, one can but remark how political speeches and businesses’ common recourse to opt-outs strikingly dismiss an essential debate: whether British labour productivity (not high by European standards) can be improved through the reduction of the weekly working time and its consequences in terms of the health of the labour force but also of work organisation (e.g. more effective team-working or computerisation).

The graph below suggests indeed how, conversely, long working hours can negatively affect productivity. We use the Stata software to run a simple linear regression predicting the hourly labour productivity depending on the effective weekly working time of employees in a group of rich Western European countries. Data is taken from Eurostat for the year 2010.

NB Measuring labour productivity per hour worked (here measured in euros) provides a relevant picture of productivity changes in the economy, for it eliminates differences in the full time/part time composition of the workforce across countries.

A few observations come to mind. First, in the countries where employees work less than 40 hours a week on average, labour is generally more productive (Italy is an exception). Second, as the blue regression line show, there tends to be a negative relationship between the level of labour productivity and the length of weekly working time. It makes the UK one of the worst productivity performers of this pool, with Austria and the Mediterranean countries.

Therefore, the possibility of improvements in productivity (a factor of competitiveness) associated with the reduction of the working week should be taken into account not only in all kinds of cost/benefit analyses of EU legislation, but also in the political debate.

The case for a renewed directive, more adaptable and protective

As the European Commission is now examining a new update of the WTD, issues stressed by this paper should not remain without a proper legislative response – especially in a country where the Eurosceptic atmosphere is now reaching a peak.

In certain sectors identified as problematic (such as health care), collective bargaining should have more weight in working time arrangements while some higher limit on the work week would remain binding (e.g. 58 hours instead of 48 hours). Leaving the entire decision-making on these norms at the national level would not be a good idea: it would undermine the possibility of European social rights and side-line important debates about productivity and work-life balance. Guaranteeing the free consenting of individual opt-outs should also be examined and possibly confided also to collective bargaining, which can foster a better bargaining power vis-à-vis employers (Davies, 2012).

A renewed directive such as this could reflect a new European model labour markets better adapted to the economic and social challenges of the 21st century.